SHANNON Airport needs to be able to get access to €100 million in funding to be competitive, its CEO Neil Pakey claimed at a meeting of the Oireachtas Joint Committee on Transport on Wednesday. He said the target of achieving 2.5 million passengers by 2021 is very possible.
Elements of Shannon’s cost base are “very high”, he claimed and he indicated that management will have to work with the trade unions at the airport to align them with competitors.
Shannon was discussed by various interests at Wednesday morning’s meeting, with Senators Martin Conway and Tony Mulcahy and Deputies Timmy Dooley and Pat Breen present, as well as representatives of SIPTU, Kevin Thompstone of Shannon Chamber and Clare county manager, Tom Coughlan, among others.
In his presentation to the meeting, Mr Pakey said Shannon needs access to €100m.
“We recommend that the borrowing facility limit for the group be set at €100m to allow Shannon Group to deliver on the recommendations of the taskforce and to ensure we can be as competitive as our peer group airport companies. Any such borrowings will be subject to business cases and ministerial consent and therefore we should not have a more restrictive limit than our competitors, be they private or public operators.”
He also said the chairman and the board of the group should appoint the directors of any subsidiary of the group.
Regarding the renaming of SFADCO, he commented, “Whilst the proposed legislation currently puts forward the name Shannon Commercial Enterprises Ltd, we would recommend this be changed to Shannon Enterprises Ltd. If this is not possible and the legal entity is named Shannon Commercial Enterprises Ltd, there is no reason why the trading name may not be different and again we would recommend the trade name of Shannon Enterprises Ltd.”
In their statement to the meeting, Owen Reidy and Jane Boushell of SIPTU said the union is concerned that the plans for Shannon won’t, despite all the good intentions, come to much, with obvious implications for workers.
“There seem to be a number of assumptions and targets within the overall plan, which do not seem to be based on demonstrative evidence-based criteria, which we have concerns about as if they do not deliver, it seems this planned initiative will fail. In that event, we would fear for the viability of good quality jobs of members.”
Mr Reidy said steps must be taken to maintain the pensions of workers from both the airport and Shannon Development. He said workers have already taken an amount of pain, with Shannon Airport workers involved in DAA restructuring and Shannon Development employees affected by the Croke Park and Haddington Road agreements.
The meeting was chaired by Mayo TD John O’Mahony and he put it to Mr Pakey that there have been suggestions that Shannon has received a competitive advantage over Knock and Cork.
Responding, Mr Pakey said there has been a feeling that some of the smaller airports have actually been favoured. He pointed out some smaller airports have links to Germany, which Shannon has not, and asked how that can be?
He said there is no issue with having some competition and some co-operation between airports.
“It’s not unusual to have more than one airport, it’s not unusual to have a bit of commercial tension and it’s not unusual to work together,” he commented. He also revealed he has been in touch with senior management at Knock.
Later in the meeting, while responding to a question from Limerick TD Kieran O’Donnell, he said while people may see competition as being between airports in the West of Ireland, the real competition is throughout Europe. He also said Shannon’s main competitors are likely to be other small gateway airports.
Running Shannon isn’t that different to running any of the other airports he has been involved with, he added. “The full Market Economy Investor Principle applies,” he said.
On this theme, he added, “Some of the cost base of the airport is very high. It’s higher than I’d like and we have to match the cost to the market.”
He indicated that he would have to work with the unions involved on that. Much of what is needed to improve traffic is to maintain relationships with airlines and get them to do business, the Scot said, and he noted that there have been improvements. “In the last four months, there has been sustained growth after five years of continued decline.”
Addressing the meeting, Mr Coughlan also urged that Shannon should have access to borrowing of at least €100m, while he said the local authority will offer all support possible to Shannon Group.
“The council is committed to working in partnership with the community, Government departments, agencies and organisations to maximise the potential of this new entity. The council has long recognised that Shannon Airport is critical to the future development of the county, the region and the West of Ireland and that the airport can also play a key role at national level,” he concluded.